Rhetoric and logic in Smith's Description of the Division of Labor

Abstract

This article analyses the first chapter of the Wealth of Nations, where the division of labour is defined and its effects described. It first shows the rhetoric and logical effects that are used to win the reader's goodwill. Then it reviews nineteenth century debates on the validity of the theory. Finally, it cites three real cases, where the division of labour does not increase the productive power of labour. In conclusion, it suggests that the theory on division of labour appears to require some adjustment, while acknowledging that some of the facts underlying arguments in its support are naturally true.     

Crises and exchange rate regimes: time to break down the bipolar view?

We revisit the link between crises and exchange rate regimes (ERR). Using a wide panel of 90 developed and developing countries over the period 1980–2009, we find that corner ERR are not more prone to crises compared to intermediate ERR. This finding holds for different types of crises (banking, currency and debt), and is robust to a wide set of alternative specifications. Consequently, we clearly break down the traditional bipolar view: countries that aim at preventing crisis episodes should focus less on the choice of the ERR, and instead implement sound structural macroeconomic policies.     

The appreciative democratic voice of DEA: A case of faculty academic performance evaluation

Data envelopment analysis (DEA) is in fact more than just being an instrument for measuring the relative efficiencies of a group of decision making units (DMU). DEA models are also means of expressing appreciative democratic voices of DMUs. This paper proposes a methodology for allocating premium points to a group of professors using three models sequentially: (1) a DEA model for appreciative academic self-evaluation, (2) a DEA model for appreciative academic cross-evaluation, and (3) a Non-DEA model for academic rating of professors for the purpose of premium allocations. The premium results, called DEA results, are then compared with the premium points “nurtured” by the Dean, called N bonus points. After comparing DEA results and N bonus points, the Dean reassessed his initial bonus points and provided new ones – called DEA-N decisions. The experience indicates that judgmental decisions (Dean's evaluations) can be enhanced by making use of formal models (DEA and Non-DEA models). Moreover, the appreciative and democratic voices of professors are virtually embedded in the DEA models.     

The set-up-to-fail syndrome

Why do some employees perform poorly? Most managers would answer that question by ticking off a list that includes weak skills, insufficient experience, inability to prioritize assignments, and lack of motivation. In other words, they would contend that poor performance is the employee's fault. But is it? Not always, according to the authors. Their research with hundreds of executives strongly suggests that it is the bosses themselves--albeit unintentionally--who are frequently responsible for an employee's subpar achievement. According to the authors, bosses and their perceived weak performers are often caught in a dynamic called the set-up-to-fail syndrome, which tends to play out as follows: A boss begins to worry when a subordinate's performance is not satisfactory. He then takes what seems like the obvious action by increasing the time and attention he focuses on the employee. But rather than improve the subordinate's performance, the increased supervision has the reverse effect. The subordinate, in perceiving the boss's lack of confidence in him, withdraws from his work and from the boss. And the relationship spirals downward. What is a boss to do? First, he must accept the possibility that his own behavior could be contributing to the problem. Second, he must plan a careful intervention with the subordinate that takes the form of one or several candid conversations meant to untangle the unhealthy dynamics in the relationship. The intervention is never easy, but the time and energy invested in it usually yields a high payback.     

An Empirical Study of Servqual's Dimensionality

This paper describes a scale, called SERVQUAL, which measures Service Quality. First, the scale's conceptual framework and the steps of its development are described. Second, criticisms arising from several replication studies of SERVQUAL are reviewed. The last part focuses on the dimensionality of the scale. Do the 22 items of the SERVQUAL scale clearly evoke, in the clients’ mind, the five Service Quality dimensions defined by Parasuraman et al. [1988]? An empirical study shows that one dimension, ‘Tangibles’, is clearly perceived followed by ‘Empathy’. The three other dimensions, ‘Reliability’, ‘Insurance’ and ‘Responsiveness ', are confused in the client's mind.     

Do tax sparing agreements contribute to the attraction of FDI in developing countries?

Measuring the effects of taxation on FDI in developing countries requires consideration of the tax sparing provision. This provision signed between developed and developing countries protects host country fiscal incentives for FDI. This paper estimates the impact of tax sparing provisions on Japanese outbound FDI between 1989 and 2000. We find evidence that the tax sparing provision influences positively the location of Japanese FDI, even after having taken into account reversal causality. JEL Classification F23 · H25 · H32 We Thank Michael Devereux, Edward Graham, Robert Lipsey, David Margolis, Claudia Rivas, Deborah Swenson, anonymous referees and seminar participants at the Franco-Korean conference in Seoul, and at the Western Economic Association conference in Vancouver for helpful discussions.     

The probability of conflicts in a U.S. presidential type election

Summary. In a two candidate election, it might be that a candidate wins in a majority of districts while he gets less vote than his opponent in the whole country. In Social Choice Theory, this situation is known as the compound majority paradox, or the referendum paradox. Although occurrences of such paradoxical results have been observed worldwide in political elections (e.g. United States, United Kingdom, France), no study evaluates theoretically the likelihood of such situations. In this paper, we propose four probability models in order to tackle this issue, for the case where each district has the same population. For a divided electorate, our results prove that the likelihood of this paradox rapidly tends to 20% when the number of districts increases. This probability decreases with the number of states when a candidate receives significatively more vote than his opponent over the whole country.Received: 12 August 2002, Revised: 7 March 2003, JEL Classification Numbers: D71. Correspondence to: Vincent R. MerlinSpecial thanks are due to Franck Bisson, a Caen PhD student, who helped collect the data. The authors also gratefully acknowledge Ashley Piggins and an anonymous referee for their comments.     

The effects of fiscal consolidations on the composition of government spending

ABSTRACT

In response to increasing debt paths, governments often implement fiscal consolidation programs. This paper studies the impact of these programs on the composition of government spending. System-GMM estimations performed on a sample of 53 developed and emerging countries over 1980–2011 reveal that fiscal consolidations significantly reduce the government investment-to-consumption ratio, i.e. a composition effect. Robust to a wide set of tests, including when using the narrative approach to identify fiscal consolidations, this significantly stronger contraction of government investment with respect to government consumption is at work particularly when debt is high and in the low phase of the economic cycle. Therefore, in such contexts, fiscal consolidations aimed at short-run stabilization may hurt the economy in the long-run through their detrimental effect on public investment, calling for a reflection upon how they could be re-designed to allow avoiding such undesirable consequences.     

Do remittances dampen the effect of natural disasters on output growth volatility in developing countries?

This article examines whether or not remittance inflows help mitigate the effects of natural disasters on the volatility of the real output per capita growth rate. Using a large sample of developing countries and mobilizing a dynamic panel data framework, it uncovers a diminishing macroeconomic destabilizing consequence of natural disasters as remittance inflows rise. It appears that the effect of natural disasters disappears for a remittance ratio above 8% of the Gross Domestic Product (GDP). However, remittances aggravate the destabilizing effects of natural disasters when they exceed 17% of the GDP. Finally, the article shows that current and lagged remittance inflows significantly reduce the number of people killed by natural disasters and the number of people affected, respectively.     

Output effects of fiscal stimulus in Central and Eastern European countries

In spite of the rapidly growing research on fiscal multipliers over recent years, little evidence has been so far accumulated in developing and emerging economies. This paper investigates the nature and the size of fiscal multipliers in Central and Eastern European (CEE) countries. Unlike most of the existing literature, we draw upon a panel vector error correction model, which appropriately captures the common long-term path of CEE countries, while allowing for different short-run dynamics, in an integrated setup. Our main results show that the spending multiplier is positive, but low on average. Moreover, its sign, significance and magnitude vary across CEE. Finally, both impulse and cumulative fiscal multipliers are sensitive to a wide range of CEE characteristics, including the exchange rate regime, the level of economic development, the fiscal stance and the openness degree.